Interest Rate Divergence Between Bank of Canada and U.S. Federal Reserve Raises Concerns for the Canadian Dollar
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#f960beb7 ver:0.27

The divergence in interest rates between the Bank of Canada and the U.S. Federal Reserve raises concerns for the Canadian dollar. If the Bank of Canada's rate falls too far below the Fed's, it could negatively affect the loonie, making imports from the U.S. more expensive and putting upward pressure on inflation. Traders are advised to add protection to their portfolios against a falling Canadian dollar. Additionally, potential delays in the Trans Mountain pipeline expansion could cost oil producers millions of dollars in lost revenues. The euro poses a bigger risk to the loonie than the greenback, as the loonie's movements against the greenback are often a reflection of the euro's exchange rate versus the USD. Experts predict volatility in the Canadian dollar due to the interest rate divergence. The Canadian economy is more sensitive to interest rates and relies on commodities like oil, while the U.S. benefits from a larger tech sector. The outlook for the Canadian dollar in 2024 will depend on positive outcomes in housing, consumer spending, China, energy, and broader USD weakness. The gap between the two rates could widen to 125 basis points, risking the currency dropping below the psychological 70 US cent level....

#newstr #InterestRates #BankOfCanada #UsFederalReserve #CanadianDollar #Inflation #MonetaryPolicy #EconomicDivergence 

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